India’s economic situation is unquestionably
dire. The stress indicators are fiscal deficit,
short-run debt, inflation, import cover of foreign exchange reserves and resilience of the financial sector to assess the risks in the economy of which current account deficit (CAD) took worse now . But the apex regulator of the economy, RBI says that CAD is pegged at manageable limit. CAD occurs when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers.
This situation makes a country a net debtor to the rest of the world. CAD is enumerated as the difference between the country’s total current exports and imports. For a country like India, the exports have to be more than the import for its completion of transition from ‘developing ’ to ‘developed’ nation.. Deficit implies that the imports are in excess of the exports. The cause of concern is the widening CAD. The seriousness of the present concern is the orientation of CAD. The remedy lies in the considerable reduction in the outflow of foreign exchange reserve. The available foreign exchange reserve does not cover the deficit adequately. The current foreign exchange reserves of $ 290 billion seem shaky. The Government declares, comparing the economic crisis witnessed in 1991 (at the start of LPG – Liberalisation, Privatisation and Globalisation measures for the development of the economy) wherein the import cover of foreign exchange reserve could manage three weeks, the current foreign exchange reserve can manage a span of seven months. However the country’s economy is highly integrated with the global economy compared to the situation of mid 1991 . Today’s crisis reveals that a high CAD with loose capital controls is a bad idea. If closed, even if mismanaged economy may look better. The country is open to policy black mail today because of the lower levels of capital controls. The country’s CAD is stubbornly high at nearly 5 per cent of GDP against 2.5 per cent in 1990-91.
The Major share of import that causes depletion of the foreign exchange reserves are through crude oil and gold. The crude oil import cannot be controlled to bring desirable effects due to the nature of its inelastic demand and its utility value in the prevailing socio economic environment . The use of oil products has become an essential feature of the change in the life style pattern of the population as well as their requirements in the fields of manufacturing and service sectors. But the issue of gold import is debatable because of its idle, ornamental and unproductive features which have got cultural implications of the citizens. India’s gold imports has increased to 3 percent of GDP for the fiscal 2011-12 from the level of less than one percent in 1990-2000. Despite the subsistence of vast population of the nation below the poverty line, the consistent increase in the trend in the country’s gold import depicts the increase in the purchasing power of the rest of the section of the society. It clearly shows the inequitable distribution of income and wealth, generated in the regime of LPG. The economic policy makers of the nation are unable to formulate the policy with the interest of majority people in mind. In the present economic scenario, ridden with crisis, the Government has no clue and how to contain CAD, apart from curbing gold imports.
Periyar’s prophecy is not only a permanent solution but also productive
In the present circumstances, the social revolutionary, Periyar E.V.Ramasamy’s prophecy on the need for shift in the cultural behaviour of the people in respect of their preference, inclination and fond of gold becomes more significant. People are habituated to invest in gold for their cultural and economic protections. In fact, gold is an idle asset, inhibiting and en-blocking the available limited financial resources from its deployment for productive purposes. In the entire world, in no other country than India, people are that much culturally and sentimentally attached to gold ornaments. It is considered as socio economic status of the people, contrary to the economic development point.
Periyar did propaganda all through his life about the enormous attachment exhibited by women folk leading to their de-powering in the society. Women are decorated toys of gold ornaments. They are intoxicated in their preferences for gold ornaments which is a great impediment for their socio economic empowerment. If the financial investment in gold is deployed for other developmental and well being activities, the standard of their living would rise. The purchasing power of the people are misused for locking up of the limited financial resources in unproductive mode of purchasing gold ornaments.
Besides, the donation of devotees in the form of gold bar and ornaments to the temple is another mode leading to idleness of generated income. Many temples are glorified to project the economic status of non existing god as ‘Wealthy God’, without an iota of utilizing it to the economic well being of the people. Can’t a sovereign government appropriate the idle gold bars and ornaments lying in the vaults of many temples for so many years to overcome the economic crisis? The cultural preference of people towards gold must be changed subjecting them to rationalistic thoughts and action differently so as to live more happily. Periyar spent his entire life to nurture such rationalistic ideas.
The Government, instead of mud-slinging with short term strategies to overcome CAD, they could formulate some programs to educate and enlighten the citizens to deploy their earned income for constructive, productive and yield bringing economic activities. The fruits of such programs could not be harvested immediately but effective at later. The Government can involve rationalist organizations in this regard. Better late than never! Let the political rulers firm up the developmental policy in this line!